Property and the Exhaustion Principle
This chapter outlines the conceptual framework for the rest of the book by describing the basic principles of personal and intellectual property law. The default rules of ownership used to define the purchasers’ rights, allowing for resale, lending, gifting and many other forms of transaction by the consumer. Now, with the rise of the digital economy, consumer rights are defined through licenses, which impose various restrictions on consumers’ disposition of their digital goods. Among the traditional rules of ownership, the exhaustion principle is particularly important for mediating the tension between intellectual property holders and consumers. Exhaustion is the notion that an IP rights holder relinquishes some control over a product once it sells or gives that product to a new owner. IP rights holders have resisted exhaustion at nearly every turn, and the licensing model allowed them to infuse new vigor into their resistance.